HR Daily Advisor: How to Help Your Employees Help You Manage Health Care Costs
When buying appliances, electronics, or jewelry, 81% of consumers extensively research and compare prices and financing offers before making their choice. This approach is in stark contrast to how most consumers approach health care—arguably a much more important decision to make. More than half of U.S. workers spend less than 30 minutes signing up for their annual health care benefit plans, and more than one-third (37.3%) of patients do not do research at all before a medical visit.
This is a growing problem in the U.S., as uncertainty surrounding our health care system continues to cause confusion and stress among consumers. As employers continue efforts to control rising costs, employees are encouraged—and expected—to make better health care choices, but aren’t always given the education, support, and tools to do so. As a result, they are more susceptible to selecting procedures, services, and plans that come at higher costs—a problem for both patient and employer.
One key area of misinformation is the assumption that medical products, services, and procedures come at a fixed price. In reality, advocacy and transparency services reveal substantial cost differences, even within the same geographic area and the same network. DirectPath research has found that the cost for knee surgery can vary by as much as $11,000 depending on the facility. Healthcare Bluebook found a $13,000 variation in cost for gall bladder surgery in one town in Detroit.
To ensure that employees are equipped with the support and tools needed to select the most cost-effective treatments for their needs, employers must implement active, effective engagement as well as advocacy and transparency services.
Employers are increasingly seeking more diverse and effective solutions to try and control health care costs. Central to this is improving employees’ health care literacy—both in general and with respect to the employer’s health options. The lack of basic understanding of how health plans work costs both employees and employers—an Aflac survey found that 42% of employees estimate they waste up to $750 each year because of errors they make with their benefits.
By better educating employees about their health care options and how to use them via personalized, one-on-one education at enrollment and year-round communication, employers can help ensure that their employees are better equipped to make smart decisions about their coverage and how to use it.
Advocacy and Transparency Services
In addition to taking an active approach to engaging their employees on their benefits options and how they work, employers who invest in advocacy and transparency tools will find that they’re able to help steer employees toward the right path for both planned and unplanned health-related needs.
These services provide employees with access to healthcare advocates who answer benefit questions, clarify out-of-pocket costs, help with referrals and authorization, and research in-network physicians and facilities. Employees are able to review options and coverage for a healthcare test or procedure and receive estimates of anticipated costs to ensure they have all they need to make an informed decision. A recent national study showed that 59% of Americans who have compared prices choose a less expensive doctor, hospital, medical test, or treatment—which can mean more savings for the employer, as well.
Advocacy and transparency services also empower employees to be smart consumers about post-procedures—particularly when it comes to understanding medical bills, which have complex and coded billing systems that often contain up-charges, manipulated costs, and errors. (Depending on which estimates you look at, medical billing estimates vary from as low as 7% to as high as 75% to 80% or more.)
With advocacy services, employees have access to the support and tools to break down and analyze each cost was woven into medical bills to ensure there are no unnecessary or overpriced charges and, if necessary, can challenge their health bills to ensure they only pay for what they received—and not a cent more.
Despite the clear benefits of using advocacy and transparency services, some studies report that as few as one in 10 employees use these tools when they’re available, and in some cases the out-of-pocket spending of employees who used the tool actually increased. These results likely reflect several issues:
- A reliance on the self-service model, where employees are asked to use online tools, rather than engaging with a live service representative to provide some context for the results. In our experience, use of life advocates can increase participation to as much as 40%.
- The assumption that higher cost = higher quality, despite research that shows no correlation between the two.
- Employees may only have checked, rather than compared, prices.
The solution? A robust, year-round communication campaign centered on live advocates, an explanation of the importance of truly “shopping” for healthcare services, actual examples of cost-savings, and steps employees can take on their own, and even personalized communications to heavy users.
Not only are these services reducing employers’ health care spending, but they are also lowering the out-of-pocket costs for their employees and their families. In a review of price comparison requests, DirectPath found that these services resulted in an average employee savings of $173.11 per procedure and average employer savings of $409.38 per procedure. The savings can add up dramatically—an employer with 1,000 employees, and 20% program utilization, could see savings of $80,000 or more.
As employers continue seeking more diverse and effective solutions to control healthcare costs, they must commit to personalized employee engagement, education, and price transparency to find success. Health care advocates help employees and their families navigate their options to become better, more informed consumers, making sure employees are making the most of their coverage and organizations are getting the best return on investment.
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